My broker’s newsletter today had an article called From Rescue to Recovery on the US housing market. USAA follows the same assumptions that all financial articles on real estate accept: Good = people moving house often and spending a lot of their money on housing. I suppose that is true from the real estate industry point of view, just as it’s may be good for refineries if people burn gasoline often and spend a lot of their money on gasoline. But we never hear this view in a financial article.
I believe in capitalism. I want people to create value that makes people spend their money on goods and services. If people aren’t buying your product, it feels bad for the person marketing the product, but it’s really just feedback from the market. Sometimes people don't want what you're selling.
Writers of articles on real estate should stop and ask themselves what are the virtues of people moving a lot and paying a lot for space.
It’s true that if a lot of good economic activity is going on in an area, it will make space there more expensive. But the cost of space is not a perfect barometer of the desirability of a particular area because we are coming out of a huge real estate bubble. It’s possible in the next few decades people will choose to spend more of their money on vacations instead of residential space. That doesn’t mean things are bad. It’s just changing preferences over time.
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